The US Securities and Exchange Commission recently froze funds related to Stefan Qin and his related fraudulent crypto entities. His firm Virgil Capital allegedly defrauded investors of as many as $92.4 million.
Fraud cases
The SEC secured a court order to freeze the assets of the New York-based crypto hedge fund- Virgil Capital. The 23-year-old Australian was running five entities, including Virgil that bilked investors out of millions of dollars. The regulator’s complaint suggests that he lied to investors of the company and also misappropriated their funds.
The SEC filed to receive a court order freezing $25 million in digital assets held by a second fund controlled by Qin and halted its operations. The court granted the filing and ordered an accounting and expedited discovery. It also prohibited the destruction of documents.
How did Qin defraud investors?
Explaining the fraud, the SEC said that Qin misrepresented his business performance and used it to get funding from investors. He also forged audit documents and provided clients with fake financial statements. He also lied about his businesses’ regulatory stats. The fraudsters claimed that they will invest exclusively in crypto trading using a proprietary algorithm. However, the funds were never used to invest in digital assets. Qin funneled millions of dollars from the fund to his own accounts and tried to pay off Chinese loan sharks.
The watchdog also noted that Qin was fabricating records and failed to redeem close to $3.5 million for his investors. He also tried to withdraw about $1.7 million from the investor funds to pay back loans. It noted that Qin and Virgil Capital told investors since July 2020 that their interests, related to the Sigma Fund, will be transferred to another fund controlled by Qin but with a different operation and management. The new fund was called VQR Multistrategy Fund LP. In reality, no funds were transferred and all redemption requests remained outstanding.
